Medibank Private Sale Bill 2006

Second Reading

I rise to speak on the Medibank Private Sale Bill 2006. One could be forgiven for feeling a sense of deja vu in this place: here we are yet again debating the sale of another public asset, the sale of which, just like Telstra, will be detrimental to the Australian community and, most significantly, to the Medibank Private members. That is right: yet again we are seeing this arrogant government attempting to force legislation through this place that is going to be detrimental to the Australian people.

During the second reading debate on this bill in the other place, we saw the debate guillotined and the bill declared urgent. That was despite the government not intending to go through with the sale until 2008—until after the next election. And why were members in the other place refused the opportunity to speak on this bill? It was because the Howard government does not care about parliamentary process, it does not care about ensuring that legislation is debated and it does not want the Australian public’s attention to be drawn to this debate to help them see the truth about this bill.

In short, this is a government that does not care that it is forcing bad legislation through parliament. This is a government that does not care about the effect of such legislation on Australia or its effect on the Australian people. This bill needs to be looked at exactly for what it is, as does the reasoning behind it—and that is the sale of Medibank Private. The government’s reasons are illogical and flawed. It has asserted repeatedly that it wants to sell Medibank Private for the benefit of members and to create lower premiums but, during estimates hearings, Senator Minchin released a CRA report that stated:

Medibank Private’s premiums will have to rise irrespective of who owns Medibank Private.

The opposition senators’ report in the inquiry of the Senate Standing Committee on Finance and Public Administration into the bill also noted that the report stated:

... that, if privatised, Medibank’s technical efficiency could be improved and that this could result in lower premiums.

The opposition senators’ report went on to say:

... the report fails to mention that, as a ‘for profit’ fund, the benefit of any efficiencies would also be directed to shareholders, and not to members, as is currently the case.

Hence, we need to step back and ask: is this bill and the resulting sale of Medibank Private going to improve the situation of those with private health insurance and those who will require private health insurance in the future and is it going to be better for Australia? The answer to all these questions is, ‘No, of course it’s not.’ It is not going to be a better situation for Medibank Private members, for prospective members or for Australia.

The sale of Medibank Private will undoubtedly drive up premiums, and this is at a time when the government should be doing whatever it can to encourage Australians to invest in private health insurance. But, yet again, this arrogant government is doing nothing to plan for the future. It has no thought for any time except the present and no thought at all for Middle Australia. It is the mums and dads out there who are going to be hurt by this bill.

There are three million Medibank Private members at present. That represents 29 per cent of the private health insurance market in this country. Medibank Private was created in 1976 by the then Fraser government with the aim of it contributing to a viable and competitive health insurance industry. The Prime Minister first raised the possibility of its privatisation 20 years ago as part of his comprehensive privatisation agenda—the results of which we have all witnessed repeatedly in this place and again today. Make no mistake: this is an agenda driven by one man’s ideology.

The Australian Medical Association has repeatedly warned that premiums will go up if Medibank Private is sold. This is a view that has been shared by highly respected and well-known economic commentator Terry McCrann, who has said that premiums will have to go up because Medibank Private shareholders will expect a dividend on their investment. Mr McCrann also raised the point that the private health insurance market is largely not-for-profit and Medibank may struggle as a for-profit health insurer or its privatisation may trigger a trend in the private health insurance sector to be geared towards money-making rather than doing the job it should be doing.

There is no doubt that it is the Prime Minister’s intention to push this legislation through the parliament and, should Mr Howard and the coalition win the next election, they will sell Medibank Private, even though, according to a recent AC Nielsen poll, 63 per cent of people are against the sale. Is it any wonder when in 2001 the Prime Minister promised the Australian people that his election policies would ‘lead to reduced premiums’ and, far from that, private health insurance premiums have actually gone up by almost 40 per cent on average since 2001?

In the Tasmanian electorate of Bass, 38.4 per cent of people had private health insurance in 2005, down from 40.3 per cent in 2004. The Tasmanian electorates of Braddon, Franklin and Lyons all also recorded decreases in the percentage of private health insurance holders. In fact, Denison was the only electorate to record an increase in the proportion of the population covered by private health insurance. With the pressures that are on the public health system, the government should be doing its utmost to encourage people to purchase private health insurance. Selling Medibank Private is not the way to boost consumer confidence in the private health sector, especially when the Minister for Health and Ageing, Mr Abbott, has stated that he will not hesitate to approve premium increase requests from the private health insurance industry.

All of this flies in the face of the government’s public reasoning behind the sale. When announcing the sale, Senator Minchin said the sale of Medibank Private would increase competition in the private health insurance sector and therefore put ‘less upward pressure on premiums’. That is going to be quite a hard tale for the Australian public to swallow when, on the day after the sale of Medibank Private, there will be exactly the same number of private health insurers and no increase in competition.

As noted in the Bills Digest by the Parliamentary Library, this bill contains the provisions necessary to facilitate the sale of Medibank Private. The digest notes that:

... a sale that does not adequately account for the interest of members in the Medibank Private fund may result in a liability to pay compensation to members. The Government has indicated that it intends to offer some form of benefit to members, but is yet to specify details. This Bill contains no pro-visions for such benefits. The Bill contains various ‘safety-net’ compensation provisions, making it unlikely that it would be found to be con-stitutionally invalid in the event that it was found to acquire the property of members. Any redress available to members in such circumstances is likely to be limited to a claim for compensation.

In trying to swing public opinion in its favour, the government has stated that it would give Medibank Private members special rights in the float, yet it has failed to outline exactly how members would be treated. The Bills Digest also notes that the bill contains safeguards directed at securing the Australian character of Medibank Private, with the intention of ensuring diversified ownership. However, these provisions will expire five years after the sale of Medibank Private. Medibank Private is worth over half a billion dollars, and one could argue that the three million Medibank Private members would have a right to be compensated if it were to be divvied up and sold off. If there is any doubt at all that Medibank Private members will be ripped off, the sale should not take place.

The opposition senators’ report also stated that, if there is a chance that taxpayers may be required to meet the cost of compensation claims arising from the sale, supporting the bill is impossible. Labor is against the sale of Medibank Private, it is against this legislation and, while the government will use its powers in this place to force this bill through, a Labor government would rip up this legislation and keep Medibank Private in public ownership, which is in the best interests of all its members and all Australians.